TMI Blog2023 (5) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... is merely a sales reversal entry and not a case of unexplained expenditure . Complete documentary evidences in support of these transactions have been filed and we are satisfied that it is not a case of unexplained expenditure. Even otherwise all these details of cash sales including the cash book have examined by ld. AO in detail while carrying out the assessment proceedings for the reason for which the case selected for scrutiny i.e. cash deposit during demonetization period, therefore CIT erred in referring to other issue which was not required to be dealt by ld. AO and thus, wrongly invoked jurisdiction u/s 263 of the Act. Since no prejudice is caused to the Revenue due to this accounting system consistently followed by the assessee and since the order of ld. AO is not erroneous as complete examination of details has been carried out through issuance of notice u/s 142(1) to which proper compliance has been made by the assessee filing requisite details and thus, the assessment proceedings u/s 143(3) of the Act has been carried out after making proper enquiry, proper application of mind and taking a plausible view in accordance with law. No justification in the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT is not covered within the ambit of sec. 263 and in view of the facts and in the circumstances it may be held accordingly. 6. For that in view of the facts and in the circumstances, the Ld. Pr. CIT erred in holding that Rs. 67,85,064/- represented unexplained expenditure whereas such sum was reversal of sales and in view of the facts and circumstances Ld. Pr. CIT failed to appreciate the matter and conduct enquiry on its own and merely set aside the matter for verification and hence the order u/s 263 is bad in law and it may be held accordingly. 7. For that your petitioner craves the right to put additional grounds and / or to alter / amend / modify the present grounds at the time of hearing. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in selling of lubricants and engine oils. Income of Rs. 11,52,500/- declared in the e-return for AY 2017-18 filed on 17.10.2017. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) 142(1) of the Act and the reason for selection for the scrutiny was cash deposit during demonetization period. The details called for were filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 as erroneous and prejudicial to the interests of the Revenue and also directed ld. AO to pass a fresh assessment order considering the following finding given in para 5 of the impugned order: 5. I have considered the facts of the case. In assessee's submission dated 04.03.2022 the assessee stated that the A.O had specifically gone through the cash book of the assessee and after having satisfied with such cash book and other relevant documents. The AO duly accepted the cash sales and deposits from 01.04.2016 to 08.11.2016 which already indicated that the AO verified the cash book with respect to one of the reasons of scrutiny selection that is cash deposits during demonetisation period as per SFT/14/FIU. Proposed 263 is related to the difference of cash expenditure of Rs. 67,85,004/-. Regarding this differences the assessee explained that the differential amount was notional cash entry. In respect of notional cash entry the assessee explained that the assessee had some fixed parties as local credit customer. As per assessee prevailing practice as and when daily local credit customers sales were made the amount is included in cash sales though some payments are recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.67,85,004/- from the total sales. The AO has passed the impugned assessment order without conducting any enquiries or verifications which should have been made in this case. The assessee has failed to completely disclose its true and correct income by non-furnishing of details as required under provisions of the I.T. Act, 1961. Clause (a) and (b) of Explanation-2 to Section 263(1) is attracted in this case. Accordingly, it is held that the assessment order is erroneous in so far as it is prejudicial to the interest of revenue. Hence, in fitness of things, there is no alternative but to set aside the case to the AO, before whom the assessee is given another chance to argue his case. 5. Aggrieved, the assessee is now in appeal before this Tribunal. Ld. Counsel for the assessee again reiterated the submissions filed before ld. Pr. CIT and also added that firstly, the assessment proceedings were carried out only for examining the issue of cash deposit during demonetization period and there is no specific addition on that account. Since ld. Pr. CIT is alleging about unexplained expenditure whereas the case of the assessee was scrutinized for cash deposits. Further, it was also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. 7.1. On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). [Emphasis Supplied] 8. Now, examining the facts of the instant case, we notice that during the course of hearing, ld. Counsel for the assessee has referred to the written submission filed during the course of revisionary proceedings regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and daily credit customer local arc amount billed (both cash credit) less amount not received under Daily Credit Customer focal A/c and Cash expenses which is actually deposited to Bank. To explain the same, we are enclosing herewith a few sample entry which is included herewith at Annexure - A. We are also enclosing herewith the summary of the same month wise sales and reversal at Annexure - It and we have also enclosed the entire cash book for the period at Annexure - A On a perusal of the 3 documents so mentioned above it will be clear that the impugned amount of Rs.67,85,064/- is not any kind of expenditure by it is sales reversal which has been booked subsequently on receiving the payment. Hence this cannot be treated as unexplained expenditure in any manner and it may be considered accordingly. iii) Without prejudice to the above, it will be appreciated that if at all such sum of Rs.67,85,064/ is treated as unexplained expenditure, then the assessee is entitled to reduction of sales of the equivalent amount i.e. Rs.67,85,064/- front it sales and on such exercise the net effect of the taxable income of the assessee is nil and hence the impugned order u/s 143(3) cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied that it is not a case of unexplained expenditure. Even otherwise all these details of cash sales including the cash book have examined by ld. AO in detail while carrying out the assessment proceedings for the reason for which the case selected for scrutiny i.e. cash deposit during demonetization period, therefore, ld. Pr. CIT erred in referring to other issue which was not required to be dealt by ld. AO and thus, wrongly invoked jurisdiction u/s 263 of the Act. Therefore, since no prejudice is caused to the Revenue due to this accounting system consistently followed by the assessee and since the order of ld. AO is not erroneous as complete examination of details has been carried out through issuance of notice u/s 142(1) of the Act to which proper compliance has been made by the assessee filing requisite details and thus, the assessment proceedings u/s 143(3) of the Act has been carried out after making proper enquiry, proper application of mind and taking a plausible view in accordance with law. 10. We, therefore, find no justification in the jurisdiction assumed by ld. Pr. CIT u/s 263 of the Act for carrying out the revisionary proceedings and even on merits, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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